Canopy Growth Q3 2025 Earnings Call Transcript

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Provided by Quartr
February 7, 2025
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Operator

Good morning. My name is Joanna, and I will be your conference operator today. I would like to welcome you to Canopy Growth's Third Quarter Fiscal twenty twenty five Financial Results Conference Call. Currently, all participants are in a listen only mode. I will now turn the

Operator

call over to Tyler Burns, Director, Investor Relations. Tyler, you may begin the conference call.

Tyler Burns
Tyler Burns
Director of Investor Relations at Canopy Growth

Good morning and thank you for joining us. On our call today, we have Canopy Growth's Chief Executive Officer, Luc Mongeau and Chief Financial Officer, Judy Hong. Before financial markets opened today, Canopy Growth issued a news release announcing the financial results for our third quarter fiscal year twenty twenty five ended 12/31/2024.

Tyler Burns
Tyler Burns
Director of Investor Relations at Canopy Growth

The news release and filed financial statements have been filed on EDGAR and SEDAR and will be available on our website under the Investors tab. Before we begin, I would like to remind you that our discussion during this call will include forward looking statements that are based on management's current views and assumptions and that this discussion is qualified in its entirety by the cautionary note regarding forward looking statements included at the end of the news release issued today. Please review today's earnings release and Canopy's reports filed with the SEC and on SEDAR for various factors that could cause actual results to differ materially from projections. In addition, reconciliations between any non GAAP measures to their closest reported GAAP measures are included in our earnings release. Please note that all financial information is provided in Canadian dollars unless otherwise stated.

Tyler Burns
Tyler Burns
Director of Investor Relations at Canopy Growth

Following remarks from Luke and Judy, we will conduct a question and answer session where we will take questions from analysts. With that,

Tyler Burns
Tyler Burns
Director of Investor Relations at Canopy Growth

I will turn the call over to Luc.

Luc Mongeau
Luc Mongeau
CEO at Canopy Growth

Thank you, Tyler. Good morning, everyone, and thank you for joining our quarter three fiscal year twenty twenty five earnings conference call. My name is Luc Mongeau, and I'm proud to join you for my first earnings call as CEO of Canopy Growth. I'm truly excited to lead the company forward as we start a new year and embark on a fresh chapter for Canopy.

Luc Mongeau
Luc Mongeau
CEO at Canopy Growth

I would like to start by expressing my gratitude for the support that the Canopy Board of Directors and our entire team have given me as I begin this new role. I would also like to thank David Klein for his leadership and support through the transition. For me joining Canopy and stepping into the role of CEO to lead this Canadian and global organization is an honor and a privilege. And before we get into the results from Q3, which Judy will cover in greater depth, I'd like to share some details about my prior experience, why I've joined as CEO and speak at a high level about my view on the company, the sector and our path ahead. Over the last twenty five years, I've had the privilege of leading and working within organizations across the consumer packaged goods industry.

Luc Mongeau
Luc Mongeau
CEO at Canopy Growth

Companies like Weston Foods, Marsh Pet Care and Procter and Gamble. In all my roles, I've dedicated myself to identifying the most promising value creation opportunities, working to understand the needs and wants of consumers and customers, while building greater organization that meet and exceeds demand with high quality innovative products. I've led product innovation R and D, revamped complex supply chains, executed global marketing campaigns and developed fresh takes on commercial strategies, all to power growth and profitability. This brings me to Canopy. When I first got involved with Canopy two years ago, through my engagement with the Board, I saw something unique.

Luc Mongeau
Luc Mongeau
CEO at Canopy Growth

Cannabis in my view represents one of the most exciting consumer trends today. The sector is evolving rapidly and we're still at the beginning of transforming how people view and experience cannabis products. Whether it's delivering new experiences or redefining approaches to wellness, cannabis has the capacity to shape and influence the future of the consumer goods sector, while broadening cultural and lifestyle trends around the world. However, optimism is balanced with our reality today. As we all know, the cannabis sector has faced real challenges.

Luc Mongeau
Luc Mongeau
CEO at Canopy Growth

Regulations have not evolved as fast as expected. Some consumer trends like beverages have taken longer to develop. The illicit market still endures. And finally the path to full legalization in The U. S.

Luc Mongeau
Luc Mongeau
CEO at Canopy Growth

Remains uncertain. But for me this is the exciting part. The opportunities ahead are just beginning to unfold. We continue to see more people move away from alcohol and instead choose cannabis to enhance their social life and support their wellness. This shifts in behaviors is not just a passing trend.

Luc Mongeau
Luc Mongeau
CEO at Canopy Growth

It's a sign of deep lasting change that will only continue to grow. As I move forward, my focus is clear to drive Canopy rapidly towards sustained profitability and positive cash generation. Right now, I'm working with the team to identify key areas of improvement to enhance Canopy in every way possible for the benefit of our consumers, our people, our business partners and our shareholders. I'll have much more to say on this when we're together for Canopy's Q4 conference call in May. For now, I would like to highlight some of the areas of our business that are showing promise and strong performance.

Luc Mongeau
Luc Mongeau
CEO at Canopy Growth

First, our medical cannabis business, Whether in Canada or across our international markets, Canopy is a recognized leader in medical cannabis. In Canada, our Spectrum Therapeutics team has built a powerful reputation for outstanding service and for meeting the diverse needs of medical cannabis patients through an ever expanding product portfolio. Internationally, we have established a solid position across the markets with the highest potential Germany, Poland and Australia. Across Europe, regulatory changes are helping power existing momentum. In Germany, we're bringing new ITHC strain to market from our Canadian platform.

Luc Mongeau
Luc Mongeau
CEO at Canopy Growth

In addition, collaboration with Europe based flower suppliers is helping us deliver the variety of product that patients are seeking. Overall, I believe we can really build upon cannabis medical cannabis business and continue to drive growth in the quarters and years ahead. Next, in our adult use business, I'd like to highlight the recent launch of the award winning Claiborne brand in Canada. In less than six weeks, Claiborne has risen to become the number three infused pre roll in British Columbia and Ontario. This showcases our ability to successfully introduce innovative product that resonate with consumers and can quickly make an impact in the market.

Luc Mongeau
Luc Mongeau
CEO at Canopy Growth

Overall, I believe our Canadian adult use business as the key ingredients necessary to grow our share of the market. Another example of Canopy's strengths is our Storz and Bakele brand. With its offering of premium vaporizers, including the iconic Volcano and the new high performance Venti, Storz

Luc Mongeau
Luc Mongeau
CEO at Canopy Growth

and

Luc Mongeau
Luc Mongeau
CEO at Canopy Growth

amp Bakele is an unparalleled leader in the premium vaporizer space. We are working to drive new innovation for stores and vehicle and keep up the momentum for what is already a leading portfolio. I'm really excited about where this brand is to date, as well as where it's going. Next, I would like to speak to Canopy USA. Canopy USA is an exciting differentiated platform that we feel is well positioned to capitalize on its ecosystem of brands and operations.

Luc Mongeau
Luc Mongeau
CEO at Canopy Growth

With the acquisitions of Wanna, Jetty and Acreage finalized, Canopy USA is already well advanced on the process of integration. It is also now realizing cost synergies as well as marketing and joint sales advantages across key markets and categories. As a final element of bringing Canopy USA to life as a single cohesive organization, Brooks Jorgensen was appointed as the organization's First President in early January. Brooks brings a wealth of experience and a robust track record in building cannabis businesses, having recently led Kiva, the largest cannabis distributor in The U. S.

Luc Mongeau
Luc Mongeau
CEO at Canopy Growth

Together with the broader Chusa team, Brooks is focused on driving strategic execution and growth of the Canopy USA platform. We see real potential in Canopy USA and expect to see even more growth as they continue to build and refine their presence. As I wrap up today, I want to reiterate that I believe we have the right ingredients for success and I'm focused on positioning Canopy to grow profitably and sustainably. I look forward to sharing more detail about the company's plans and updated strategy in greater detail when we release our full year financials at the May year. Thank you.

Luc Mongeau
Luc Mongeau
CEO at Canopy Growth

Judy will now speak to the results from the quarter.

Judy Hong
Judy Hong
CFO at Canopy Growth

Thank you very much, Luke, and good morning, everyone. I'll start by walking through our Q3 fiscal twenty twenty five results, including performance by key business units. I'll then discuss progress on our balance sheet and cash flow, followed by a discussion on our priorities and outlook for the balance of fiscal twenty twenty five and into fiscal twenty twenty six. Let's begin with our third quarter results. Q3 was a solid quarter marked by continued momentum in medical cannabis and stores and vehicle as well as improvement in our adult use business in Canada.

Judy Hong
Judy Hong
CFO at Canopy Growth

And combined with cost efficiencies, we significantly narrowed our adjusted EBITDA loss in the quarter. Canopy delivered consolidated net revenue of $75,000,000 in Q3, a decrease of 5% or up 8% excluding the impact of divested businesses compared to Q3 of last year. Consolidated gross margin in Q3 was 32% down compared to 36% a year ago, but broadly in line with our target range. Q3 adjusted EBITDA was a loss of $3,000,000 an improvement of 61% versus last year. And free cash flow was an outflow of $28,000,000 an improvement of 17% compared to Q3 of fiscal twenty twenty four and a significant improvement relative to the first half run rate of the current fiscal year.

Judy Hong
Judy Hong
CFO at Canopy Growth

I'd like to now review the results of our key businesses in more detail starting with Canada. Q3 net revenue was $41,000,000 an increase of 1% compared to a year ago. Canada Medical continued its momentum marking another record revenue quarter and posting year over year revenue growth of 16%. We're gaining market share with a growing number of insured patients and we've expanded our product assortment to meet the needs of our medical consumers. The growth relative to Q2 was also driven by return of Wanna Gummies as well as contribution from our newly launched Claiborne infused pre rolls.

Judy Hong
Judy Hong
CFO at Canopy Growth

Our adult use business was down 10% year over year, but increased 15% quarter over quarter. The improvement was driven by one, Claiborne infused pre rolls launched in mid November are off to strong start two, WANEGAMI's return to shelves after Q2 supply disruptions and three, increased bulk flower sales as we captured opportunities to sell to other producers. And while some of our core brands are still facing competitive pressure in the marketplace, we've deployed targeted investments, which are beginning to gain traction. And we're focused on accelerating growth in the adult use market with the continued Claiborne rollout, a strong pipeline of new products and an enhanced field sales strategy to further grow doors and points of distribution. Canada gross margin in Q3 was 25% and cash gross margin adding back non cash depreciation costs was 35%.

Judy Hong
Judy Hong
CFO at Canopy Growth

The growth in Canada Medical continues to be a positive contributor to overall Canada gross margin with the decline in gross margin in the quarter primarily attributable to higher initial cost to produce Claiborne. We're focused on improving the cost structure of Claiborne and expect cash gross margins to return to at least mid to high 30% targeted range based on the historical channel mix. International Markets Cannabis net revenue of $12,000,000 in Q3 FY twenty twenty five was up 14% compared to Q3 of last year. Within international, we again generated outsized growth in Poland. Germany also saw strong growth from additional product registrations that we've secured in prior quarters.

Judy Hong
Judy Hong
CFO at Canopy Growth

We launched tweed brand of flower products in Germany during Q3 and have secured additional EU based supply for the upcoming release of additional tweed flower products. The growth in Europe was partially offset by the decline in sales in Australia Medical Cannabis business as well as U. S. CBD sales, which are no longer part of Canopy's business. In Australia, the medical cannabis market is expanding steadily, but there has been increased competition.

Judy Hong
Judy Hong
CFO at Canopy Growth

We are sharpening our focus in Australia, transitioning the SMB business in Australia to SMB Germany to ensure dedicated support for our medical cannabis business in Australia. International markets cannabis gross margin was 41% in Q3 of FY 2025, up 100 basis points from Q3 FY 2024, driven by increased sales in Poland, which carry higher gross margin. Sewers and Bickel had another strong quarter with revenue of $22,000,000 in Q3, up 19% compared to last year. Q3 is traditionally a strong quarter for SMB given the holiday selling season. The growth was also led by robust direct to consumer online sales, continued strong contribution from Venty, which was launched during Q3 of last year, as well as growth in Germany.

Judy Hong
Judy Hong
CFO at Canopy Growth

Tourism vehicle gross margin was 41% compared to 51% last year due to higher indirect costs including shipping costs. Looking at our SG and A expenses for Q3 of fiscal twenty twenty five, sales and marketing and G and A expenses declined 24% year over year primarily due to the cost reduction program undertaken during fiscal twenty twenty four. Year to date, our G and A costs excluding the impact of divestitures have also declined by approximately $10,000,000 versus the prior year. And we're well on our way to achieving $10,000,000 to $15,000,000 in G and A cost savings by the end of this fiscal year. Q3 fiscal twenty twenty five adjusted EBITDA was a loss of $3,000,000 compared to a loss of $9,000,000 a year ago.

Judy Hong
Judy Hong
CFO at Canopy Growth

This was led by positive EBITDA contribution from all three business units offset by unallocated corporate overhead costs including public company costs. I'd like to now review our cash flow and balance sheet. Free cash flow was an outflow of $28,000,000 in Q3, an improvement of 17% compared to the prior year. Cash used from continuing operations was $27,000,000 This included cash interest payments in the quarter of $17,000,000 which was down from $21,000,000 in Q3 of last year. As I indicated during the previous call, working capital improved significantly compared to the first half run rate driven by timing of certain payments and tight working capital management.

Judy Hong
Judy Hong
CFO at Canopy Growth

Turning to the balance sheet. As of 12/31/2024, we had $178,000,000 in cash and short term investments and total principal debt balance of $460,000,000 dollars In October, we further reduced our term loan balance by USD $100,000,000 by making an early prepayment in the amount of USD97.5 million dollars bringing term loan principal balance to approximately USD250 million dollars We have an option to further extend maturity of the term loan to September 2027 from December 2026 by making additional USD100 million dollars payment at USD 97.5 to par before the March. Under the current ATM program that was launched in June, we've generated total gross proceeds of USD228 million including additional USD41 million that was completed post the end of Q3. We believe we have ample cash in our balance sheet to meet our near term obligations and the remaining ATM program should also provide us with the flexibility to invest in growth initiatives. I'd like to now briefly discuss Canopy USA.

Judy Hong
Judy Hong
CFO at Canopy Growth

Following the completion of Acreage acquisition in December of twenty twenty four, Canopy SA has now moved forward with the full integration of the three businesses to capture revenue and cost synergies as quickly as possible. Given that it's only a little over a month since Acreage acquisition has closed and less than a month since the new President has been in place, we plan to provide more details around the business performance and financials of Canopy USA when we report our year end earnings in late May. I'd like to now provide our key priorities and outlook for the balance of fiscal twenty twenty five and into fiscal twenty twenty six. In Canada Cannabis, we expect continued strength in our medical business and improved performance in our adult use business as we focus on building on the initial success of the Claiborne launch, new product introductions and continued efforts to drive expanded distribution and improved velocity of our products. In international markets cannabis, we expect continued momentum in our European business as we focus on ensuring consistent product availability, expanding points of distribution and launching new products.

Judy Hong
Judy Hong
CFO at Canopy Growth

In Australia, we are in the process of transitioning Stores and Bickel sales to Stores and Bickel Germany to ensure increased focus on the medical cannabis business in that market. For Q4, we note that international markets Canada sales in Q4 of last year included over $1,700,000 of sales in U. S. CBD, which is no longer part of our business. For stores and vehicle, we expect another solid quarter in Q4, but year over year growth is likely to be challenged given the tough year ago comparison.

Judy Hong
Judy Hong
CFO at Canopy Growth

Note that Q4 FY twenty twenty four benefited from outsized growth from Venti as production caught up with sales following supply constraints in Q3 of last year. And finally, the impact from divested businesses plus The U. S. CBD sales will be approximately $2,100,000 in Q4. Based on our expectation of continued momentum across our medical businesses, improvement in Canada adult use and continued cost discipline, we believe achieving positive adjusted EBITDA at the consolidated level is firmly in sight in the coming quarters.

Judy Hong
Judy Hong
CFO at Canopy Growth

And as we look forward to FY 2026, we're focused on driving long term sustainable growth in our businesses, while further improving our profitability and cash flow. This concludes my prepared comments. We will now take questions.

Operator

Thank you. Ladies and gentlemen, we will now begin the question and answer session. The first question comes from Aaron Grey at Alliance Global Partners. Please go ahead.

Aaron Grey
Managing Director, Equity Research at Alliance Global Partners

Hi, Luke and Judy. Thank you for the question here. Just wanted to dig a bit deeper in terms of plans for international to capitalize on some of the growth there. I know you mentioned some additional supply agreements that were signed, but curious if you believe the asset light model will enable you to capture and maintain a healthy share of the growing international pie. And then would that preclude you from generating more robust margins compared to being vertical internationally?

Aaron Grey
Managing Director, Equity Research at Alliance Global Partners

So any color in terms of the outlook that you have for international given the growth we're seeing from some of the competitors out there? Thank you.

Judy Hong
Judy Hong
CFO at Canopy Growth

Sure. Thanks, Aaron. And I'll start and Luke may have his view as well. So first of all, I do want to just call out that we did have a very strong international performance in the European markets in particular. If you look at our overall revenue of $12,000,000 in international market segments, you have to really bifurcate the European performance versus the Australian performance.

Judy Hong
Judy Hong
CFO at Canopy Growth

Just to give you a context, the European business, which includes key markets like Poland and Germany, account for roughly 60% of the international market segment. We have a strong position in the Polish market and we're seeing continued outsized growth in that market. And as I alluded to on the call, we've also had very strong growth in Germany from additional supply that we have secured. Overall, our European business in Q3 was up in excess of 70%. The Australian business, however, was down on a year over year basis.

Judy Hong
Judy Hong
CFO at Canopy Growth

We did call out last quarter that we saw increased competition, particularly in the medical sales business for medical cannabis sales for Australia. That part of the business also includes our SMB sales in Australia, and we're really trying to transition that business into Germany to ensure that the Australian team can really focus on improving the performance of the medical cannabis sales in that market. Now if we step back and think about the business going forward, number one, the market is growing. Based on the positive changes to regulation in Germany, the market is growing and we think that that provides us with a tailwind to benefit from the market growth. Secondly, as I said, we are partnering up with additional supply partners and we think that that gives us opportunity to really supply the market in an asset light model.

Judy Hong
Judy Hong
CFO at Canopy Growth

Keep in mind, we also have our King Kardon facility in Canada that is GMP certified and we are leveraging that facility, our low cost structure there to service the international market. So the combination of our Canadian supplied as well as our third party partners in the European markets, we believe we have the right ingredients to really take advantage of the growth opportunities in that market.

Luc Mongeau
Luc Mongeau
CEO at Canopy Growth

Yes. Thank you, Judy. Good morning, Aaron. Nice to meet you and thank you for the question. Building a bit on that, I'm five weeks in right now.

Luc Mongeau
Luc Mongeau
CEO at Canopy Growth

The medical market, both in Canada and internationally, has very strong fundamentals. We've got some solid elements in place. As I dig deep in the business and look at the strategy, the approach, the resource allocation, these are all things that I'm considering and I'll have more to share at the next call, but it is an extremely attractive category.

Operator

Thank you. The next question comes from Bill Kirk at ROTH Capital Partners. Please go ahead.

Bill Kirk
Managing Director at Roth Capital Partners, LLC

Hey, good morning. Luke, I wanted to keep going there on that kind of management and strategy philosophy conversation. Like it's been I think five weeks, but in what ways do you view the company and opportunities differently than your predecessor? And in what ways so far that you've seen do you agree with the path and strategy that was in place?

Luc Mongeau
Luc Mongeau
CEO at Canopy Growth

Good morning, Bill. Thank you for the question. The it's a bit too early for me to tell. What I can tell you in the five weeks that I've been in the business is that I am impressed with the quality of the talent overall, the quality of the processes, the quality of the supply chain. And for me, I'm working very closely with the team right now, doing the analysis, doing the validation or proving wrong some of the hypotheses and the approaches that are there right now and I'm extremely encouraged with what I see.

Luc Mongeau
Luc Mongeau
CEO at Canopy Growth

More to come at the next call.

Operator

Thank you. The next question comes from Matt Bottomley at Canaccord Genuity. Please go

Operator

ahead.

Matt Bottomley
Managing Director, Equity Research at Canaccord Genuity Inc

Good morning, everyone. Thanks for taking the questions. This question might be more for Judy. Just wondering, understanding some of the success that you guys have had on the cost cutting initiatives.

Matt Bottomley
Managing Director, Equity Research at Canaccord Genuity Inc

We've had a number of quarters now where the free cash flow burns

Matt Bottomley
Managing Director, Equity Research at Canaccord Genuity Inc

come down. But if you look at that sort of the ATM line there, $250 some odd

Matt Bottomley
Managing Director, Equity Research at Canaccord Genuity Inc

million of raises this year for the first nine months, I'm just wondering where you see the cadence of that going just as you continue to progress towards breakeven. And obviously, the question we all get just given the fact that the equity valuations right now continue to be challenged in the sector overall.

Judy Hong
Judy Hong
CFO at Canopy Growth

Yes. Hey, good morning. So as you said, we

Judy Hong
Judy Hong
CFO at Canopy Growth

certainly did make significant progress on our balance

Judy Hong
Judy Hong
CFO at Canopy Growth

sheet and our cash flow had significant progress on our balance sheet and our cash flow has improved significantly on a year over year basis and over the last few years. We do expect further improvement in FY 2026 from a cash flow perspective. Certainly, the expectation for improved operations and improved profitability across our businesses will be a contributor. We're also looking at on a year over year basis improvement in cash interest expenses following the pay down of our term loan that we made in October. And we also have an option to pay down additional $100,000,000 in the coming months as well.

Judy Hong
Judy Hong
CFO at Canopy Growth

So when you unpack our cash flow for next year, really a significant portion of the outflow is expected to be in the interest expenses line. We expect relatively modest CapEx investments in the year. And there's some additional cash costs related to the legacy facilities that we're still incurring, but we've made significant progress also in reducing some of those cash costs as well. So we think that the combination of the cash balance that we have, continued actions that we're taking to improve our cash flow and reduce our leverage will really provide us an ample flexibility to reinvest into the business as well to continue to fuel growth opportunities in our portfolio.

Operator

Thank you. The next question comes from Federico Gomez at ATB Capital Markets. Please go ahead.

Frederico Gomes
Director, Institutional Research, Life Sciences at ATB Capital Markets

Hi, good morning. Thanks for taking my question. Just a question on Poland. I think, Judy, you mentioned that you saw side growth in that market. So could you talk a little bit more about that market specifically?

Frederico Gomes
Director, Institutional Research, Life Sciences at ATB Capital Markets

What's the size right now? How fast it is growing? How the competitive environment in Poland looks like in terms of market share that you have in that market? Any further color about the Poland market? Thanks.

Judy Hong
Judy Hong
CFO at Canopy Growth

Sure, sure. Thank you for the question. So within our European business, as you called out, Poland has really been one of the strongest contributor to that growth in Europe. If you look at the marketplace itself, it is more insulated from some of the competitive pressure just because the government actually issues import permits and we've been able to secure those imports by really providing consistent supply and quality of the products that the patients are demanding. And so right now, we're effectively fulfilling all of the import registrations that we have.

Judy Hong
Judy Hong
CFO at Canopy Growth

Demand is exceeding supply. It has been demand has been exceeding supply over the last couple of years. We understand that there may be some market dynamics and regulations that could evolve over time. But at this point, we're very excited about the market dynamics and our leadership position in that market and our ability to really fulfill all of the import permits that we have secured in that market.

Operator

Thank you. The next question comes from Pablo Zwanek at Zwanek and Associates. Please go ahead.

Pablo Zuanic
Managing Partner at Zuanic & Associates

Yes, good morning everyone and thank you for the questions. Look, first, I want to ask regarding Constellation Brands and maybe just as a bit of a reminder for the audience, compared to three, four years ago, how involved is Constellation Brands in the board, in the direction of cannabis growth? And can you leverage the distribution assets of Constellation Brands in The U. S. As one that begins to roll out their Hume derivative products?

Pablo Zuanic
Managing Partner at Zuanic & Associates

That's one question. And the second one, if I may ask right now, I mean, of course, congratulations on the 60% growth in Europe, very impressive number. Maybe Judy, just a reminder for us in terms of the strength of your route to market capabilities there, distribution capabilities. We're beginning to realize that one thing is exporting from Canada and other thing is being able to distribute the product there. So just remind us whether that those assets were impacted by cost cutting in the past or whether they are strong or do you need to rebuild them a bit?

Pablo Zuanic
Managing Partner at Zuanic & Associates

Thank you.

Judy Hong
Judy Hong
CFO at Canopy Growth

Why don't I start with the second part of the questions and then we'll adjust your first part of your question as well. So the ZEAR International infrastructure is primarily we have supply coming in from Canada as well as the third party partners in those markets and we have distribution partners. So we have worked closely with our partners, both in Germany and in some instances even in The UK to make sure that we have collaboration across those markets to have distribution channels available to us in those markets. I would say, if you take a step back in an international market, the biggest constraint over the last couple of years has really been about supply. I think as you know, we've gone through a big improvement in terms of our flower quality and supply continuity in the Canadian markets.

Judy Hong
Judy Hong
CFO at Canopy Growth

And that is also helping our international business with improved flower quality, more consistent supply and higher THC going into those markets. So I don't think there is expected to be a big step change in terms of really the investments required to change our business in that market. I think it's really leveraging what we have from a product perspective, our partnership with distributors perspective and taking advantage of the market growth. From your question on Constellation, I mean, I think, as you know, they remain our largest shareholder. They are now more of a passive shareholder given the exchangeable share ownership that they have in Canopy.

Judy Hong
Judy Hong
CFO at Canopy Growth

We still have relationship with them in the context of just sharing best practices or just changing ideas. But I think from their perspective, it's really about investments as an investor in Canopy, less about operational exchanges in that sense.

Operator

Thank you. This concludes Canopy Growth's third quarter fiscal twenty twenty five financial results conference call. A replay of this conference call will be available until 05/08/2025, and can be accessed following the instructions provided in the company's press release issued earlier today. Canopy Growth's Investor Relations team will be available to answer additional questions. Thank you for attending today's call.

Executives
    • Tyler Burns
      Tyler Burns
      Director of Investor Relations
    • Luc Mongeau
      Luc Mongeau
      CEO
    • Judy Hong
      Judy Hong
      CFO
Analysts
    • Aaron Grey
      Managing Director, Equity Research at Alliance Global Partners
    • Bill Kirk
      Managing Director at Roth Capital Partners, LLC
    • Matt Bottomley
      Managing Director, Equity Research at Canaccord Genuity Inc
    • Frederico Gomes
      Director, Institutional Research, Life Sciences at ATB Capital Markets
    • Pablo Zuanic
      Managing Partner at Zuanic & Associates
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Canopy Growth Q3 2025
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